Need advice structuring a deal

I'm still learning, but what I know from the class is that after you did the Comps, then, go look at the property. Check the surrounding area, how much the rental in the area, good school, etc.

What kind of rehab does the house need?
Light, medium or need a lot of work such as structural/mechanical issues.
Base on your observation, you can make a low offer (20-40% below market, add the rehab cost and your profit, the difference is for the investor (leave some meat for them). The owner may not take the first offer, but persistent may pay off.
When you make an offer, you would create a purchase contact with your name And/Or Assign; then, you submit it to your buyer.

Hope other mentor will correct me if I'm wrong.

and wonder, should you submit that contract to your buyer, or a different contract at a price that leaves your profit?

HI if you want to PM me Ill see what I can do to help, sincerely, Jim

Step 1)
You need to know what the ARV - After Repair Value of the property is. You find this by using COMPS - Comparables. You can go to Trulia.com for this. Put in the subject address and toward the bottom they will list homes that have sold that are similar. Look at your square footage and choose COMPS that are within 20%. Also use COMPS that are recent, close to the subject property and if possible have the same number of bedrooms and bathrooms. Once you have around 5 of these you need to figure out what the COMPS are per square foot. You are going to take this average and multiply it times the square feet of the subject property. It will look something this.

Subject Property:
3BD/2BA
Built: 1976
2,040 SqFt

COMPS:
Address Distance Sold price
per sqft Sold price Sold date Bed Bath Sqft
323 Beaumont Ct, Vista CA
0.24 $195 $477,000 01/11/13 3 2 2,442
321 Beaumont Ct, Vista CA
0.26 $194 $465,000 02/27/13 4 3 2,400
601 Patricia Ln, Vista CA
0.31 $236 $405,000 05/03/13 3 2 1,715
962 Tiger Tail Rd, Vista CA
0.32 $219 $374,000 01/31/13 3 2 1,706
468 Rudd Rd, Vista CA
0.38 $233 $565,000 04/30/13 3 2.5 2,427
Average comp price per square foot. $215

In this example
$215 x 2,040 = $438,600

After Repair Value (ARV) $438,600

This is the top of the market price.
You will then need to find the bottom of the market. You will find these to be REO - Real Estate Owned aka Bank Owned Properties. These are the homes that were foreclosed on and the banks sold them "as is". To the same as above but use REO's.

This will give you the bottom of the market.

You need to put in your offer UNDER the REO COMP price enough that there is some room for you to make your assignment fee.

Don't be greedy. If you try and market it to another investor above what the REO COMP price, they have no reason to work with you.

Go get em!

The kind of offer to structure depends a lot on the seller's motivation. Why is the seller selling and what kind of deal can you put together that will provide a solution to his problem. Does the seller need quick cash, is he leaving the area, will he consider keeping it as a rental if it doesn't sell? Is he willing to carry any financing? Without more details, your question of how to structure the offer is kind of like asking how much a new car costs.

I'm still new too, I am very impressed on when we all need help in our issues and beleive me "my turn will come" I hope to get all the responce you are getting. God blees all our DG Family.
We still haven't made our fisrt deal yet, Still studing The Edge we got not too long ago. But tuning into you guys, I feel I made the right chioce in joining this team! Hope to make my first offer soon too!

Willow,

Thanks for the very clear break down of the steps to accomplish this deal.
It really is nice when other members help each other.

I wish you much success with your deals!

Stay Focused
RER

Glad it helps. You know all of the information you need mostly comes a bit at a time. Which is a good thing. Otherwise we would be overwhelmed with it all. It's like a puzzle and one day you have that "ah ha" moment when you actually understand it.

Fantastic advice, All. One thing I would add is this. if the seller is very motivated, ask the seller,"Would you take what you owe on the home?" The answer would depend on or show how motivated a seller is.

With gratitude,

Patrick

Are you asking about how you should have your contracts?

Make sure your contracts have your back out clauses.

Inspection period
Partners approval
Clear and Marketable Title
Contingent upon you finding a funding partner ect....

Is that what you were asking?

I hope that helps

with gratitude,

Makeba